Amazon, jobs, and the Fed — What you need to know for the week ahead

President Donald Trump is back from Davos. Stocks are at record highs. And some of the biggest names in the market are set to report fourth quarter earnings.

In the week ahead, the latest Federal Reserve meeting and the January jobs reports will be economic highlights, after this past week revealed that the economy grew at a slower pace than expected during the final three months of 2017.

No change is expected in the Fed’s interest rate policy and there will be no press conference with Federal Reserve chair Janet Yellen after the meeting. The central bank should keep its benchmark interest rate target pegged between 1.25%-1.50%. This will also be Yellen’s final meeting as Fed Chair, with Jerome Powell set to take over as Fed chair in early February after garnering Senate approval this week.

This week will mark the final Federal Reserve meeting with Janet Yellen (L) as chair of the central bank. Yellen will be replaced by Jerome Powell (R) next month after his Senate confirmation this past week. REUTERS/U.S. Federal Reserve

On Friday, the January jobs reports is expected to show 180,000 jobs were created in the first month of 2018, a bounce-back after December’s somewhat disappointing headline jobs number. The unemployment rate is expected to stay put at 4.1%.

On the earnings side, this coming week will feature some of the biggest names in tech, with Apple (AAPL), Amazon (AMZN), and Google parent company Alphabet (GOOGL) all expected to report earnings after the bell on Thursday. Wednesday afternoon will also be a major one for tech, with Facebook (FB), Microsoft (MSFT), Qualcomm (QCOM), eBay (EBAY), and PayPal (PYPL) all reporting results.

Other major earnings reports on the schedule for next week include McDonald’s (MCD) on Tuesday morning, Boeing (BA), AT&T (T), and Mondelez (MDLZ) on Wednesday, and Time Warner (TWX), MasterCard (MA), Visa (V), and UPS (UPS) on Thursday. All told, 119 members of the S&P 500 will report earnings this week.

Amazon CEO Jeff Bezos. The tech giant will report earnings after the market close on Thursday, February 1. (Ted S. Warren/AP)

“I keep trying to figure out what the narrative is”

Nobel Prize-winning economist Robert Shiller is perplexed.

“I keep trying to figure out what the narrative [for the stock market] is,” Shiller told Yahoo Finance’s Jen Rogers in Davos this past week. “I think that economists have to be more expansive in this dimension. They don’t like to talk about narratives.”

For Shiller, the most likely story right now is that the current run we’re seeing in the stock market is a descendent of the 1928 stock market, which boomed under a pro-business president before the crash of 1929 which ushered in the Great Depression. And whether you’re a stock market bull or bear, no one likes to hear that a repeat of the 1929 crash is right around the corner.

But Shiller’s probing for one big story to explain the market comes at a time when it does seems as if there are a few market themes most investors agree on.

Robert Shiller

For one, global economic growth is strong and likely to remain strong through the end of the decade, as the IMF laid out this week. Another is that the tax cuts passed by the Trump administration last year were not priced into the market. This second idea is, of course, related to the first — strong growth will continue because taxes are now lower in the world’s largest economy. And the market is only now accepting this relationship.

The current enthusiasm about markets and the economy, then, appears less an echo of the 1929 market which saw proclamations of markets having reached a new “permanently high plateau” and more a reflection of an investor class that knows business cycles still exist. Central bank actions after the financial crisis may have changed the length and shape of the current cycle, but ultimately rising employment, rising asset prices, and rising leverage overheat an economy and the excesses are burned off.

What ends each economic cycle and what the negative impacts are from a cycle’s end are unique in each downturn. But the story right now might be that for all of the optimism among consumers, politicians, business leaders, and investors, no one thinks there won’t be another downturn.

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Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland